Morning Market Briefing – Bennett McDowell 8/29/2018

Don’s Notebook August 29, 2018

Futures were higher this morning, giving the Dow, S&P 500 and Nasdaq a chance to chalk up a fourth straight positive session. The S&P 500 and Nasdaq are coming off three straight record closing highs. The Dow posted its highest close since Feb. 1.
Earnings reports out this morning include American Eagle (AEO), Brown-Forman (BFB), Chico’s (CHS), Dick’s Sporting Goods (DKS), Express (EXPR), and Movado (MOV). Later, (CRM), Guess (GES), and PVH (PVH) issue their numbers after today’s closing bell.

Nafta Notes:
Canada’s Foreign Minister joined the NAFTA talks yesterday afternoon.

Brexit Notes:
Getting an agreement on a Brexit deal by the end of October is no longer seen as realistic by EU and U.K. negotiators, with both sides now expecting talks to run well into November, according to people familiar with opposing positions.
For British Prime Minister Theresa May, there are political risks in drawing out talks as rumors fly around Westminster about a possible challenge from Boris Johnson at October’s Conservative Party conference.

Economic Data Notes:
Today’s GDP report is a second estimate and was written off as. But not corporate profits which offered the first look at the second-quarter effects of this year’s tax cut.
• The second estimate for second-quarter GDP came in at a 4.2 percent annualized rate vs 4.1 percent in the first estimate.
• Consumer spending is expected to come in at a 3.8 percent rate vs the prior estimate’s 4.0 percent.
• The GDP price index is seen holding at 3.0 percent.
The Department of Commerce Corporate Profits report is derived from the national income and product accounts and are expressed in several measures.
• A significant aspect of this report is that After-Tax Profits component showed a Y/Y change of 6.7% vs. 2/7%
The MBA Mortgage Application applications for home mortgages fell a seasonally adjusted 1 percent in the week of August 24th, but the unadjusted year-on-year gain increased by 2 percentage points from the prior week to 3 percent.
• Applications for refinancing fell 3 percent from the prior week, with the refinance share of mortgage activity remaining unchanged at 38.7 percent.

Overnight Markets Notes:
Things remain quiet around the world this week.
• In Asia, the indexes closed mixed at the end of the day’s trading, with the Shanghai Composite having had the greatest change, down by 0.31%.
• The MSCI Asia Pacific Index rose 0.3 percent while Japan’s Topix index closed 0.5 percent higher as hopes remained high of successful conclusion to North American trade talks
• The European markets are mixed, with the FTSE 100 most in decline, down by 0.36%. the Stoxx 600 Index was 0.2 percent lower at 5:45 a.m. Eastern Time as Italian markets remained under pressure.
• In the Americas, the indexes closed mixed at end of trading, with the Mexican Bolsa Index having taken the greatest fall, by 0.78%